When it comes to making money in real estate investing, there are really only a few (three actually) of ways to do it. The three reasons to be in real estate are Cash Now, Cash Monthly and Cash Later. Let’s take a closer look at each one of them.
1) CASH NOW
Let’s face it, we need money to live and pay the bills. Without this cash, we would have to go back and work for “the man”.
If you’re not a full-time investor, this is a reason why a lot of people are afraid to quit their job and work for themselves, those monthly expenses. If you are employed your Cash Now is that paycheck, right?
Cash now and also be the money that you get from “Flipping” properties. Whether it be from Wholesaling, Rehabbing, Subject To, Lease Option or Pre-Foreclosures we need the cash from each of these investing models to put food on our tables and clothes on ours (and our children’s) backs.
Cash now is good. It’s that chunk money. And it’s fun! But if you don’t continue to do the work then no cash would be coming in. (wow, that kinda sounds like a job?) It’s great at capital building but doesn’t make me as free as I would like.
2) CASH MONTHLY
While those big rehab checks are coming in you can reinvest in something that will give you monthly cash. Buy and holds. Getting passive monthly income from a single family, multifamily even notes provides those monthly checks. Isn’t that how Robert Kiyosaki does it in Rich Dad/Poor Dad.
Cash monthly will give you more freedom. Freedom to do whatever you want when you want. I’m not telling you to stop your Cash Now generator. I’m saying to get Cash Monthly use some of your Cash Now and buy yourself some freedom!
Pretty soon you will be building an empire. You’ll have enough Cash Monthly to be able to take a month off in the summer or whatever else your freedom desires! If you were only flipping single-family houses and you took a month off in the summer, you wouldn’t have any income coming in.
Do you see how Cash Monthly will give you freedom? But wait… there’s more.
3) CASH LATER
Now that you have Cash Now and Cash Monthly, Cash Later takes care of itself. It comes when you sell, exchange or refinances those properties somewhere in the future.
You see with properties you have an appreciating asset. Not only is it appreciating every month but your tenants are paying off your mortgage.
So between the appreciation and the mortgage pay down, your equity just gets bigger and bigger!
You can sell your property and get a boatload of cash.
If it’s creating a lot of Cash Monthly, you may want to keep those checks coming in. If so then you will want to refinance to get you cash out.
Not 100% of your cash, which will only get you in trouble.
You should take out about 75% of your cash leaving 25% equity in the building, that way if there is a downturn in the market, your protected. Not only that, at 75%, you should still have a decent positive cash flow. Did you know that you do not pay tax on any of the money that you take out during a refinance?
Now take that money and go buy some more get some more cash monthly! In doing so, these properties will start appreciating and the tenants will begin to pay down your mortgage for you.
You’ve just increased your net worth because you have increasing equity in one or two more properties instead of the building that you started with.
Can you see how your empire is being created?
Can you see how it can be created in a short time? Holding single family houses will make you money. Holding apartment houses will make more, and the more doors you have the more rich you get! Which do you prefer?
Though the concepts are simple to understand, don’t be fooled into thinking they can be easily implemented and executed. These are the basics of real estate and how successful real estate investors work in order to maximize their earnings.
Want a jumpstart in real estate? Join us at the Women’s Real Estate Network! Check out a meeting in your local area at www.WRENinspires.com